June 2, 2009

Better Trades US News

Riding the enthusiasm wave from Monday’s surge in the markets, the major exchanges tried to maintain their upward momentum, as more news from General Motors (GM) and pending home sales played a role in investors’ sentiment.

During the morning session, the National Association of Realtors (NAR) released data confirming that U.S. pending home sales for April posted its largest monthly gain in nearly eight years. For the month, sales jumped 6.7% to a reading of 90.3, up from the previous month’s tally of 84.6 and well ahead of economists’ projection of 85. The current reading includes gains over the past three months and sits 3.2% higher than this time last year.

Troubled automaker General Motors announced Tuesday morning that efforts to downsize the struggling company might come to fruition, as GM signed a tentative deal with an unnamed source to sell the company’s floundering Hummer brand. The sale could tentatively save some 3,000 U.S. jobs within the manufacturing, engineering and dealerships related to Hummer. In addition to Hummer, GM is also in the process of trying to sell its Saab and Saturn brands, as well as phasing out its Pontiac brand. General Motors will primarily concentrate on its Chevrolet, Cadillac, Buick and GMC brands.

In corporate news, a leading specialty retailer of premium video products, appliances, audio products and accessories, Hhgregg Inc. (HGG) announced early Tuesday morning that the company’s profits during the 4Q increased due to higher market share and additional store openings. For the quarter, HGG booked net income of $13.9M, or $0.42 per share, compared to the previous year’s earnings of $10.3M, or $0.31 per share, an increase in profits of nearly 35%. Quarterly revenues increased as well, climbing from $324.2M to $364.9M, a jump of almost 13%. Analysts, in the meantime, were looking for the electronics retailer to book net earnings of $0.41 per share on overall sales of $364.8M. By the sound of the closing bell, shares of HGG were down nearly 7%, losing $1.13 to end the session at $15.74 per share.

Providing drilling services in four principal markets, water-related products and services, mineral exploration drilling, geotechnical construction and oil and gas services and production, Layne Christensen Co. (LAYN) confirmed early Tuesday morning that the company’s 1Q earnings plummeted year-over-year, due primarily to the lack of demand in global markets. For the most recent period, LAYN recorded a net profit of $996K, or $0.05 per share, in sharp contrast to the prior year’s profits of $10.6M, or $0.55 per share, a decline of more than 90%. Revenues, meanwhile, slipped more than 16% from last year, falling from $244.5M to $204.2M. Analysts, within the industry, were looking for the drilling and construction service provider to record quarterly earnings of $0.16 per share on total sales of $215.9M. By the close of Tuesday’s trading session, shares of LAYN were down 5.6%, losing $1.28, to end the day at $21.38 per share.

As a leading independent national distributor of natural foods and related products in the United States, United Natural Foods Inc. (UNFI) made it known before the opening bell on Tuesday that the company’s profits during the 3Q surged over last year’s results as lower fuel costs and better operating efficiencies boosted the bottom-line. For the quarter, UNFI posted net earnings of $17M, or $0.39 per share, versus last year’s earnings of $13M, or $0.30 per share, an increase in profits of almost 31%. Sales during the period increased marginally, from $887M to $889.5M. In the meantime, analysts were looking for the food purveyor to post quarterly earnings of $0.34 per share on overall revenues of $891.5M. Since the opening bell, shares of UNFI surged in trading, adding $2.75, or 11.8%, to end the day at $26.05 per share.

The price of oil continues to push the $70 a barrel mark this week, but still fell short by the end of Tuesday’s trading session. At the sound of the closing bell, the price for a barrel of light, sweet crude for July delivery slipped $0.03 to settle at $68.55 per barrel. In additional NYMEX trading, gasoline for June delivery was up $0.007 at $1.9252 a gallon, while heating oil advanced $0.0124 to $1.7979 a gallon. Natural gas for June delivery dropped $0.129 to $4.12 per 1,000 cubic feet.

Bond prices traded higher today, despite the overall move higher in the equity markets, as investors were willing to place some of their capital into the more secure government-backed Treasuries. By the closing bell, the benchmark 10-year note was up 13/32 to 95 27/32, as its yield retreated to 3.62%, down from Monday’s 3.71%. Meanwhile, the 30-year note gained 24/32 to 96 4/32, yielding 4.48%, down from yesterday’s 4.56%. Finally, the 2-year note inched higher by the close, adding 1/32 to 99 28/32 with its yield falling to 0.95% from the previous session’s 0.97%.

In the Forex markets, the Dollar was mixed against the major global currencies on Tuesday as investors have been betting on an economic recovery. By late afternoon, the 16-nation Euro was higher in trading versus the greenback, buying $1.4310, up from last night’s price of $1.4160 and reached a new high in 2009 of $1.4313. Trading against the Dollar, the British pound was priced at $1.6585, up from Monday’s price of $1.6445, while the Dollar slipped in value versus the Japanese yen, buying 95.56, lower than the previous day’s price of 96.55.

After a topsy-turvy trading session, the markets barely maintained their upward momentum from Monday’s session, as the major indices concluded the day in the green. At the sound of the closing bell, the Dow Jones Industrial average was up 19.43 points, or 0.2%, to close out the day at 8,740.87.

Meanwhile, the broader market indicators were mixed at the close, as the S&P 500 index was up marginally, adding 1.90 points, or 0.2%, to end at 944.75, while the NASDAQ composite index was slightly higher, adding 8.12 points, or 0.4%, to conclude the session at 1,836.80.

2009 Better Trades Article

brought to you by

BRIAN MULLIN